Interest Rate: The Last Six Months
Of Federal Activity

About

This Report

This is a computer-generated report that shows all of the federal activity with respect to the keyword "Interest Rate" over the last six months. This is a demonstration of the power of our government relations automation software.

Hansard

House: 15 Speeches
Senate: 13 Speeches

House Senate

Bills

Active: 0

Regulations

Filed: 0
Proposed: 0

The House

Mr. Joël Lightbound (Parliamentary Secretary to the Minister of Finance, Lib.)

December 7th
Hansard Link

Oral Questions

“... IMF says that the Canadian approach should be emulated and should go viral, because investing when interest rates are low and infrastructure is needed is the right thing to do for Canadians, for the ...”

Mr. Joël Lightbound

December 1st
Hansard Link

Government Orders

“...he worst since the Second World War.

We were in a situation where Canadians voted for a plan. Interest rates were low, and we knew that there was a need for infrastructure spending in communities across the country. I have spoken to a lot of mayors who can confirm this. I am sure that all MPs in this House know about the dire need for infrastructure spending in all their communities. Therefore, when we came into office, we looked at that situation, and we decided that while interest rates were low, it was important to invest and to make sure that we not only invested in infrastructure but reduced inequalities. We know that when inequalities are on a downward trend, economic growth is better. We have seen it in Scandinavian countries, for instance. They can attest to that. They have had good economic growth while they have maintained inequalities at the lowest possible level. That is where we wanted to go.

It is a plan that has been approved by international institutions. Christine Lagarde, of the IMF, said that Canada's approach should go viral, that this approach should be emulated by other countries in the world, and that the smartest thing to do would be to invest in Canadians and invest in infrastructure while interest rates are low to boost the economy and get better growth. It would help improve the state's...”

Mr. Nathan Cullen (Skeena—Bulkley Valley, NDP)

November 28th
Hansard Link

Government Orders

“...ions over a massive federal budget, but also decisions about the rules that govern the economy, not interest rates, but just about everything else outside of that policy.

We saw an interaction w...”

Hon. Kevin Sorenson (Battle River—Crowfoot, CPC)

November 28th
Hansard Link

Government Orders

“...15)

I was speaking to a Liberal member the other day who asked, why worry about the debt when interest rates are low? Interest rates are low. However, fiscal responsibility is what we expect from a government. If our mindset is “interest rates are low then why worry about it”, what happens when the rates start to turn around? I...”

Mr. Alexandre Boulerice (Rosemont—La Petite-Patrie, NDP)

November 27th
Hansard Link

Government Orders

“...estment funds to build infrastructure in our communities.

During the campaign, they said that interest rates were low and that it was a good time to borrow money to invest in our communities, in...”

Mr. Joël Lightbound

November 23rd
Hansard Link

Business of Supply

“...eaker, that is a very good question.

One of the first things that thefinance minister said—as interest rates were low, as the Canadian economy had been sluggish for too long, as we were debating...”

Mr. Guy Lauzon (Stormont—Dundas—South Glengarry, CPC)

November 8th
Hansard Link

Government Orders

“...erest each and every year. When they think about it, that is $3 billion a month, and that is if the interest rate stays the same.

I wonder what the constituents of Davenport think of increasing ...”

Mr. Alexandre Boulerice (Rosemont—La Petite-Patrie, NDP)

November 2nd
Hansard Link

Government Orders

“...are many things we could talk about. Let me go back to the last election. The Liberals told us that interest rates were low and that it was the right time to borrow money and to run deficits in order to reinvest in our infrastructure. That might make sense. It is the mandate given to them by Canadians.

However, what we are learning is that instead of running a small deficit to build infrastructure, they ran up a large deficit, and we still have no infrastructure.

The deficit is higher than projected, and not because the government spent more money on infrastructure. In fact, it spent less than anticipated. Shovels are not in the ground, projects are not moving forward, and some projects have not even been approved. The money is not making its way to the towns and villages of our communities.

This week, The Canadian Press reported that $2 billion in infrastructure spending had been delayed. However, this is money that should have been invested in our communities this year to help build new infrastructure. The Liberals just keep putting it off.

What is the reason for this deficit if not infrastructure spending? After all, this was the idea flogged to Canadians in the last election.

As the finance critic, I am very concerned about this situation. The government is not investing in our communities as it said it would, and the deficit is much higher than projected.

The economic lever to grow the economy is just not there. Not only are the Liberals breaking their promises, but they are also increasing the public debt much more quickly than they had promised. They are doing exactly the opposite of what they had promised. I have to wonder where they are headed and whether Canada is going to hit a wall at some point. Instead of investing in our communities and in infrastructure, the Liberals are doing nothing and yet still adding significantly to the deficit. (1115) [English]

I want to be clear about that.

In the last election the Liberals' platform said that, because interest rates are low, this is the time to get some loans, have a small deficit, and spend money on infrastructure because we have a deficit in infrastructure. That was true then and is still true. That was their logic.

That spending on infrastructure should have helped to increase growth in our country, but what we are seeing right now is that deficits are bigger than expected and there is no spending on infrastructure. Projects are not there. Money is not being spent in our cities, villages, and provinces. We do not know exactly why the money is not being spent but the deficits are higher. Why? What is the logic behind that? It is the complete opposite of what the Liberals said they would do in the last federal campaign. As the finance critic, I am worried about that, because it is not sustainable.

The Liberals are not doing what we need in our communities to help families: create more public transit; build bridges, roads, arenas, and pools, and everything that makes the lives of our citizens easier; increase the possibility of business and trade and help people to get start-ups and have the numeric infrastructure and Internet connections. High speed Internet in some regions is still a big problem. It is not there.

We are worried about the way the Liberals are not doing what they promised to do. They are not spending on infrastructure and they are not creating growth in our economy.

This may surprise the House, but I am also worried about the fact that, in his last economic update, the finance minister's document said that the public debt charges that they were expecting, the interest we are paying on our debt, will increase from $24.2 billion for 2017-18 to $32.8 billion 2022-23. In five years, there will be an increase of $8 billion in the interest on public debt charges. That is a lot of money, and it will probably get worse.

Those numbers, the provision or the prediction, are based on a really low interest rate. The actual interest rate, or the provision, is about a 25-point increase per year or less. However, all the experts say that the interest rates will go higher than that, so those numbers are wrong. The economic situation is that the Bank of Canada will be in a position to increase the basic interest rate much more. Therefore, those figures will get worse, and we will pay much more than that. People who are listening to this should look at those numbers. It is not what experts say will happen.[Translation]

I want to say it again. It may surprise the House to hear that the NDP finance critic is worried about this, but in the economic update delivered last week, we learned that the projected interest charges are basically unrealistic. Between 2017 and 2018, we will be paying $24.2 billion in interest on the debt. That is a lot of money. In 2022-23, so five years later, we will be paying an estimated $32.8 billion in interest on the debt. That is an increase of over $8 billion in five years in interest alone. That probably will not happen; it could be even worse.

Those forecasts are based on current interest rates and very small yearly increases in interest rates for the next few years. Everyone agrees that, considering the current economic situation, the Bank of Canada will not be able to keep interest rates as low as they are at the moment. Interest rates will likely go up by over 25 basis points per year. The figures presented are unreali...”

Mr. Bob Saroya (Markham—Unionville, CPC)

October 20th
Hansard Link

Statements by Members

“...result of the Liberal government's new tax changes. Bill's family business did not survive the high interest rates in 1982 under Prime Minister Pierre Trudeau.

Relentlessly, he started all over ...”

Mr. Joël Lightbound

October 17th
Hansard Link

Business of Supply

“...elves. When we took office in 2015, growth was slow, and investments were needed in infrastructure. Interest rates were low, and there were pressing needs in our cities and across the country. We thou...”

Mr. Luc Berthold (Mégantic—L'Érable, CPC)

September 26th
Hansard Link

Government Orders

“...anadian infrastructure and stimulate the economy. We were told that we had to take advantage of low interest rates in order to invest. Two years later, the result is that $25 billion, not $10 billion,...”

Mr. Sean Fraser (Central Nova, Lib.)

September 19th
Hansard Link

Government Orders

“...alers that are left with inventory on their lots that they cannot sell. The amendment proposes a 1% interest rate on vehicles, based on the price of vehicles, per month. If I do the math in my head, t...”

Mr. Kevin Lamoureux (Parliamentary Secretary to the Leader of the Government in the House of Commons, Lib.)

September 19th
Hansard Link

Government Orders

“...uivalent to at least 1% per month of the price paid by the dealer. The amount would equal an annual interest rate of at least 12%. This arbitrary rate does not take into account the fluctuations in th...”

Mr. Tom Kmiec (Calgary Shepard, CPC)

September 18th
Hansard Link

Government Orders

“...uld happen. If we borrow a lot on the public side, we inevitably squeeze the private sector side as interest rates go up. We have been seeing interest rates go up this year, and they may even go up again one more time if the central bank decides to do that. Twenty million dollars is a small amount of money, but it gets us toward that goal. I asked the question before of the member for Oxford.

I have some concerns with parts of the bill when it comes to the financing for some of these new tasks that will be assigned to CBSA. I support the bill. It is good that we are implementing the agreement, but I am concerned that perhaps there was not enough money set aside for training and potential new facilities in the previous budget. Some kind of explanation and extra attention should be paid to this. I hope to see that at the committee level. I hope it will really dig down into the costs associated with ensuring we have a proper exit control system on the visa tourist side, but also for the products and parcels that may be leaving our country that are going to be stopped. Do we have the facilities and manpower to ensure we can do all these extra tasks? If it requires 100 or 200 more hours at a certain control point, is that going to be overtime or extra officers being hired to shore up the resources in human capital now in CBSA?

Those questions about infrastructure spending and facilities for exit inspection points are open questions on the costing of these initiatives. I hope the committee takes a good, hard look at the costs associated with this and provides some feedback and recommendations to the government on what that would look like in the near future.

The bill also comes at the right time, when we have kicked off the really serious negotiations on NAFTA. We cannot ignore what is happening outside the House, across the border. We are negotiating with our biggest trading partner and attempting to ensure we maintain all the benefits Canadians receive from NAFTA. It is at a time when we are trying to indicate to Americans that it is our full intention to follow through with this agreement, which was signed by President Obama and our previous prime minister, Harper, and actually implement it, follow through with it, and maximize the benefits Canadians are receiving from our freer border trade. It is a good sign that we are proceeding with it. It is a good indicator to negotiators on both sides that it is our intention to provide Americans the certainty they require for their national security needs and trade needs, as well as our own. We are indicating to them that these are our expectations going forward, that we are going to maintain this free border trade. It is a sign of good faith that we are approaching negotiations with open eyes, but also with firm objectives and demands.

I want to spend one moment on this. I really wish Parliament had stronger rules around knowing the types of negotiating objectives the Government of Canada has. I know the international trade committee met during the summer and much of that information was provided. However, I really wish it was a statutory requirement, more so than from the good graces of the government, that it was willing to share with members of Parliament and the Senate. It should be more like Congress works in the United States, where there is a statutory requirement to not only present objectives on NAFTA, but also have them confirmed by Parliament so we can then play an active role in ensuring the concerns of our communities and residents in our ridings are heard.

Even during the summer, many businesses and small business owners came to me with different concerns around the threshold, about their products being able to clear customs, and having some certainty. Sometimes some companies were having customs stop products instead of clearing them for different reasons because they were not meeting the requirements. At other times, the products were simply making it through. There was no rhyme or reason for when a product would clear or not. It had nothing to do with time of year, or the port of clearance it was going through.

That point of having stronger rules would apply to everything in the House. Parliament should have much greater control over the Government of Canada's objectives when it comes to international agreements, as well as free trade agreements, so we know not only what the negotiating objectives are but approve the negotiating objectives and amend them. I do not mean giving it an entirely new direction or wiping out the government's intent. After all the government should be judged according to its goals at the next election, and in-between, and whether we really should be playing a greater role. (1325)

The border insecurity issue caused by the Liberals with the increase in crossings at the borders between Quebec, Manitoba, and the United States is a cause for concern. I have heard from a lot of Canadians who doubt that the Liberals have mastered the situation or grasped the enormity of it. When we have people crossing the border illegally, seeking to take advantage of our very generous refugee system here, fleeing from the United States, the second-freest country in the world—we are definitely the first—that is a cause for concern to many Canadians. They want certainty that we have a handle on the border and that the Government of Canada is taking the issue seriously and not causing a situation in which even more people will try to cross illegally, especially now when we are moving into the winter.

Bill C-21 is a good bill. I would like to see more study at committee on the cost implications of some of this. If there is a connection to pieces in the budget or in the future, those should be indicated to the committee as well.

The timing is one thing that I judge. This is the first day that Parliament has returned. I would have thought that the first thing we would perhaps debate would be something to do with the small business tax proposal the Liberals have pushed forward. It is interesting that we are debating this bill, although it is important. The small business tax proposal by far is the number one issue I am hearing from residents in my riding. I held a town hall on Saturday from 5 to 7. I was basically asking my constituents to miss dinner with their family and the Stamps game, which in Calgary is almost like a religious experience, and most people go to it. I had over 100 small business owners show up. They were farmers and physicians, and they were all passionately interested in the details. I had Kim Moody there from Moodys Gartner providing a technical explanation on the changes being proposed. That is the type of debate we should be having here in the House, having complete details provided to us by the Minister of Finance and the Minister of National Revenue on the implications of the small business tax changes they are proposing at this time.

We could have had a debate on border control issues specific to illegal crossings of our borders in Manitoba and Quebec. There could have been a great first day of debate on that, to really test the government to see whether it has mastery of the situation and understands what is going on.

We could also have had a debate on public debt management. With the interest rate increasing and future potential interest rate increases in store, the public debt management policy of the government and whether it has a handle on that are open questions. As interest rates go up, the costs of public debt financing in Canada will go up. How much more debt ar...”

Mr. Andrew Scheer (Leader of the Opposition, CPC)

June 14th
Hansard Link

Oral Questions

“...ds with his credit card bill is bad enough, but now the Bank of Canada has indicated it might raise interest rates soon, something the U.S. has already done. Raising the interest rates by just a quarter point would mean at least a billion dollars in new interest charges...”


The Senate

Hon. Nicole Eaton

December 5th
Hansard Link

Budget Implementation Bill, 2017, No. 2 Second Reading

“...sitive nature, when pre-publication would cause adverse effects, such as when changing subsidies or interest rates. But there is no scenario imaginable in which cannabis regulations would qualify for ...”

Hon. Ghislain Maltais

November 22nd
Hansard Link

Criminal Code Bill to Amend—Second Reading—Debate

“...today. What Senator Plamondon had argued at the time is perhaps even more relevant today, since the interest rate she cited at the time was 19 per cent. A rate of 60 per cent was barely considered usurious at the time, but the fact is that is the rate still on the books, even though bank deposits generate less than one per cent interest these days. Something needs to change for the benefit of consumers, and I don’t mean the people who don’t need it. Many people do not need to use credit cards or short-term loans from certain financial institutions that have a less than stellar reputation. We have to be very careful about that. The vast majority of Canadians have much more than just one credit card and more than one small loan here or there, given by certain financial institutions. People can put off making payments for a while, but sooner or later, they run up against deadlines. As Talleyrand said, credit is necessary, but it is deadly if poorly managed. Credit is a tool that can help individuals and businesses grow. If not used wisely, credit can destroy businesses and ordinary citizens. I believe that Senator Plamondon and Senator Ringuette both testified before the Banking, Trade and Commerce Committee, where they explained their bills quite clearly. Unfortunately, elections erased those bills from the Order Paper. The subject has now been revived so we can examine it again, but perhaps a new perspective is in order. For one thing, a 60 per cent interest rate nowadays is extreme, but it is allowed under the Criminal Code. We may therefore have to amend the Criminal Code. Senator Ringuette will probably talk about that during the debate on Bill S-237. The interesting thing is that credit is becoming easier to get, even for students who may not really understand that they have to pay off their credit cards eventually. In many cases, parents have to pick up the pieces when that happens. Financial institutions are never on the losing end. Never have I seen a financial institution take out a full-page ad in the Globe and Mail or in La Presse to inform the public that it has incurred financial losses because of a credit card. Never. Yet credit can often ruin many of our young people who are pursuing their studies or have just started working. When they do not pay off their credit card balance, their name is mud for quite a while. Good credit is easy to lose and hard to regain. Young people in particular have no idea what is going to hit them when they are 25 or 30 and want to borrow money to buy a car or their first house, condo or apartment. A small $500 debt they neglected to pay can end up costing them a loan. That is awful. I believe it is the duty of parliamentarians to look at what is happening to people who do not understand the consequences of their actions. Not every Canadian has a bachelor’s degree or a doctorate. There is the middle class and there is the real middle class, and then there are a great many Canadians below them still. It is our duty as senators to look out for them. We are their last line of defence. The Senate has a very important role to play in this area. We are the last line of defence for these people who are unable to manage their own affairs. We have a duty to them. I will not fight here to help banks make more money, but I will fight for the little guy, young people who do not yet know how important it is to maintain good credit. We are going to work together on that, and we need to start thinking about this more seriously in the coming months. I was reading the speech given by Senator Grafstein, who you all knew, and it is even more relevant now than it was when he gave it in 2005. The speech that Senator Plamondon gave in 2004 is also still relevant, as is the one given by Senator Ringuette, who made a big impression on senators with her passion, strength, and voice, even if she did speak a little more softly. It is important to look at what we can do for Canadians. Most governments, no matter what the level, are not very interested in looking at what happens to young people who do not know how to manage their own affairs. It is all well and good to offer courses, but when people are in debt up to their eyeballs, it is not so easy to get out of it. I think this is a duty we will need to closely consider together over the coming weeks and months if we want to hammer out a Senate bill that all senators can support, in their wisdom and in accordance with their responsibilities to this class of people. I know that trying to amend the Criminal Code is a major enterprise in and of itself. I don’t know whether we will succeed, but if we don’t ask the government to do this, we will never know. If we can bring this to the attention of the Minister of Finance, maybe he could also look into this issue, more thoroughly than we could. We are sounding the alarm: things need to change. No matter what it takes, no matter our political stripe, things need to change. The current interest rate on unpaid credit card balances is about 19 per cent. Some people pay off their balance...”

Senator Maltais

November 2nd
Hansard Link

Finance Superintendent of Financial Institutions

“...institution can no longer sell the debt to the CMHC. That buyer will therefore be penalized with an interest rate that is twice the rate being offered by the CMHC. I would like you to convey these con...”

Some Hon. Senators

June 21st
Hansard Link

Budget Implementation Bill, 2017, No. 1 Third Reading

“...st. Your child earns, say, $75,000 or $80,000. We are now hearing that the Americans will put their interest rate up to 1 or 1.25 per cent and that there will be further increases in the U.S. interest rate. What does do that the Canadian interest rate? If we go back to the prime lending scheme in the past in the States, for example there was a person in Baltimore earning $20,000 a year. He had a house worth $300,000 with a $200,000 mortgage at 2 per cent. When they doubled the interest rate to 4 per cent, he went bankrupt. Why? It's because people with easy money rates can bo...”

Hon. Larry W. Smith (Leader of the Opposition)

June 21st
Hansard Link

Finance Government Spending

“... response is to raise rates, effectively tightening supply. For those living off a trust fund, high interest rates are positive; but for the average hard-working Canadian with a mortgage or business loan to pay, high rates of interest cause concern.

The PBO estimates that if the Bank of Canada were to raise key interest rates from the current 0.5 per cent to 3 per cent, the average Canadian family would have to use 16.3 per cent of its disposable income for debt repayments by the end of 2021. As mentioned in my speech earlier, the CMHC, Moody's and other major organizations are concerned about the dangerous level of mortgage debt in markets like Toronto and Vancouver.

Given that we are heading toward massive deficits and higher interest rates and currently facing instability in the housing markets of several cities, what will ...”

Hon. Peter Harder (Government Representative in the Senate)

June 21st
Hansard Link

Finance Government Spending

“...frastructure are necessary for preparing the Canadian economy for the future.

With respect to interest rates, I would also suggest that our interest rates are at historic lows, and that is unsustainable over the long term of the economic cycle. However, the government believes that the risk of explosive interest rate growth is not in the foreseeable future, although some flexibility in interest rates does take place, as the honourable senator will know.

With respect to the housing market, the government has undertaken a number of measures, particularly through CMHC, to better prepare consumers for the challenge of a changing economic and interest rate environment and is also working in particular markets, particularly Toronto and Vancou...”

Senator Smith

June 21st
Hansard Link

Finance Government Spending

“... level. Once you get into one and half or one and three quarters of your base amount, even at a low interest rate, it can be very difficult for the average Canadian family.

This leads to our gre...”

Senator Mockler

June 20th
Hansard Link

The Estimates, 2017-18 Main Estimates—Sixteenth Report of National Finance Committee Adopted

“...ittee is very concerned that if a significant downturn in the job market or even small increases in interest rates were to happen, it could potentially hit the government's purse very hard, thus causi...”

Hon. Elizabeth Marshall

June 20th
Hansard Link

The Estimates, 2017-18 Main Estimates—Sixteenth Report of National Finance Committee Adopted

“...nt increased stress testing standards to ensure people could still afford their mortgages at higher interest rates than they are currently paying. In addition, lenders can no longer insure mortgages on homes with a purchase price over $1 million, nor can they insure mortgages on homes purchased for rental or as investments.

Although CMHC has said that total insured volumes fell 41 per cent in the first quarter of 2017, Finance officials, when testifying at the National Finance Committee, said it was too early to determine the impact of the new rules.

Concerns are also being expressed about increasing consumer debt, including mortgage credit, which has been growing faster than disposable income. Inherent in this is the risk associated with record low interest rates and individuals' ability to cope with an increase in interest rates, which many economists say is imminent. In addition, premiums for mortgage insurance were increased in March of this year after new rules were implemented requiring mortgage insurers to have more capital on hand as a hedge against potential losses.

CMHC, the Crown corporation, provides mortgage insurance and is, in fact, the provider of the majority of mortgage insurance. Canada Guaranty and Genworth also provide mortgage insurance. They are regulated by the Office of the Superintendent of Financial Institutions and were also required to increase their premiums.

Last month, the Finance Committee met with officials of Moody's Investors Service, the International Monetary Fund, the Office of the Superintendent of Financial Institutions, the Department of Finance and CMHC to discuss the housing market and whether it could impact the government's fiscal framework. Moody's downgraded the credit rating of Canada's six largest banks on May 10, citing concerns that expanding levels of private sector debt could weaken asset quality in the future.

Moody's further elaborated by stating that:

Continued growth in Canadian consumer debt and elevated housing prices leaves consumers, and Canadian banks, more vulnerable to downside risks facing the Canadian economy than in the past.

An official of the International Monetary Fund testified on May 30 when they were in Ottawa for their annual consultation process. At that time, we were informed that, during consultations, the housing market had come up as an important issue for the Canadian economy, citing the problems at Home Capital, house prices in Toronto and Vancouver, the ratings' downgrade by Moody's, the high level of household debt and the exposure of the banks to the housing sector. We were informed, for example, that mortgage lending alone accounts for 45 percent of the banks' total loans. Of particular interest were comments regarding the government, that a significant portion of mortgages are backed by the full faith of the government.

CMHC also discussed the consultations currently being undertaken by the Department of Finance on lender risk- sharing for government-backed insured mortgages. CMHC officials also testified regarding the corporation's mandate and programs, as well as the government-backed mortgage insurance, which currently stand at $500 billion.

CMHC informed us of their stress-testing program, which is designed to understand the impacts of changes in the economy as well as other types of circumstances that could impact CMHC. Officials informed us that they try to tailor the stress scenarios to the actual reality of the market. For example, last year they looked at a U.S.-style housing correction, which is a 5 per cent increase in unemployment and 30 per cent decrease in house prices. This year they are looking at a more severe house price decline because house prices have continued to elevate.

CMHC officials informed us that, in addition to the programs provided by the corporation, they are a stabilizer when the economy is under stress. For example, in 2008 and 2009, when the private mortgage insurers were under stress and reduced their participation in the market, CMHC indicated that they had helped keep the housing market going and ensured stability in that sector.

In concluding their testimony, CMHC officials informed us of the following. This is a quote from their testimony because I wanted to convey to senators the assurances that we were given by CMHC:

Recent developments, including Home Capital and the downgrading of Canada's big six banks by Moody's Investors Service, has caused some to question the stability of Canada's housing finance system. Moody's is a respected credit rating agency and its opinion matters to market participants. Notably, Moody's has cited high levels of household debt and elevated house prices as key reasons for the downgrading. . ., This is consistent with CMHC's analysis of market conditions.

Having said that, CMHC is not concerned about the state of our financial exposure and we remain confident in Canada's housing finance system in general. Canada's banks have consistently been rated among the strongest in the world. Moreover, CMHC's latest stress testing results demonstrate that the corporation has sufficient capital to withstand severely disruptive economic conditions.

This is not the first time Canada's big six banks have been downgraded, but it does provide a note of caution that we need to remain vigilant against risks that could jeopardize the stability of Canada's financial system.

Last week, the Bank of Canada said that the high levels of household debt and red-hot housing markets pose the biggest threat to the stability of the country's financial system. Mortgages and home equity lines of credit make up about 90 per cent of Canada's household debt, and the Bank of Canada has previously said that it is concerned that mortgage credit is growing faster than disposable income.

Other than Vancouver and Toronto, price increases have been moderate, but the areas where housing has been growing the fastest make up about half the value of Canada's housing stock and about one third of the population. As a result, the housing situation in Vancouver and Toronto could have an impact across the country.

The Standing Senate Committee on National Finance held four meetings on the Main Estimates and we heard from 21 witnesses from eight organizations.

As I have already mentioned, a number of departments and agencies indicated that most of the initiatives outlined in the budget are not included in the Main Estimates, as the Main Estimates are prepared before the budget is released.

Officials from Health Canada indicated that increased funding has been provided for a number of programs, including an increase of $440 million for First Nations and Inuit health programs. Officials discussed health and social services provided to First Nations children living on reserves, the Indian Residential Schools Settlement Agreement, funding for mental wellness programs, as well as funding to assist First Nations communities with access to safe, reliable water and waste water services.

Canadian Heritage officials discussed a number of initiatives including the Canada 150 Fund established to celebrate the one hundred and fiftieth anniversary of Confederation to support numerous community and national activities. Officials also discussed a number of budget initiatives for which funding will be requested through Supplementary Estimates.

CMHC's funding of $2.7 billion in the Main Estimates reflects a budgetary increase of $700 million, of which $576 million is for social infrastructure. CMHC officials also discussed their budget allocation of $30 million for market research and analysis, including insights into housing markets that are overheated and information on escalating housing prices. They indicated they are expanding their surveys to provide more timely and more accurate information on the housing market.

(1630)

This issue of the housing and consumer debt has been ongoing for the past year, and we've been very concerned about it. Even within the last day, there have been at least three articles on housing, interest rates and debt. There's one here from yesterday where Canada's Finance Minister, Bill Morneau, said he discussed with his provincial counterparts whether more actions are needed to ensure the stability of the country's housing market.

There was also an article where the Bank of Canada raised with sudden urgency a July rate hike in Canada. It looks like the interest rates increase is very imminent. Some people are really borderline with regard to managing their debt.

There's another one. The Parliamentary Budget Officer just released a report today where he's saying that Canadians will have to devote an unprecedented amount of their income to debt repayments as interest rates return to normal levels.

So the housing and interest situations are really conc...”

Hon. Anne C. Cools

June 20th
Hansard Link

Appropriation Bill No. 2, 2017-18 Second Reading—Debate Suspended

“...erage household debt was slightly under 100%. One of the main reasons for this higher level is that interest rates have decreased, making debt more affordable.

Honourable senators, ...”

Senator Mockler

June 20th
Hansard Link

Budget Implementation Bill, 2017, No. 1 Eighteenth Report of National Finance Committee Presented

“...cer released a report that said household debt-servicing capacity will be stretched even further as interest rates rise to more normal levels.

Now we hear, in yet another report today, that the Governor of the Bank of Canada may hike interest rates in a few short weeks.

Let me tell you, honourable senators, when I sit down for...”

Hon. Larry W. Smith (Leader of the Opposition)

June 14th
Hansard Link

Finance Economic Growth—Housing Market

“...umes of an overheated housing market and a continuing debate over the possibility of an increase in interest rates.

Last Thursday the Bank of Canada released its semi-annual financial system rev...”

Senator Smith

June 14th
Hansard Link

Finance Economic Growth—Housing Market

“...come ratio, which is very serious.

The Americans are indicating that they will increase their interest rates in the next three to six months. In our country, what would happen with an impact of a 1 per cent hike in interest rates to consumers that are so heavily indebted?

I recognize the good economic news y...”


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